Agriculture: Transformation Is Coming, Despite Low Crop Prices

While the global economy heats up, farmers face yet another year of low commodity prices. After four years of recession for U.S. growers, farm incomes are down about 25% from 2014. Adding insult to injury, corn production remains on track for another record-breaking year.

When commodity prices are low, farmers are more sensitive to prices for the inputs they use. Will they make their money back on pricey new biotech seeds and patented pesticides? And with fewer firms competing for their business thanks to an epic wave of corporate consolidation, concerns about affordability will only rise.

Worries over competition have prompted the European Union to delay its deadline for antitrust review of Monsanto and Bayer’s proposed merger until March.

In November 2017, the antitrust activist group Open Markets Institute pointed out that Monsanto-Bayer would be the world’s largest seller of herbicides and seeds for vegetable and cotton crops. It would be the world’s largest owner of intellectual property for herbicide-tolerant seed traits and the largest company researching seeds and traits. Lastly, it would be a huge player in the rise of agricultural data platforms.

But a lot of research and investment is happening outside giant firms like Monsanto, Bayer, and DowDuPont. Start-ups are largely leading innovations in automation and agricultural biotechnology. For example, Cibus used gene editing to develop a nontransgenic canola crop that is tolerant to sulfonylurea herbicides. The website AgFunderNews counts 245 start-ups in plant biotechnology alone.

Highflier Indigo Ag, a four-year-old start-up, raised more than $200 million in a fourth round of funding late last year. Indigo sells seeds coated with specialty microbes that improve row crop yields by helping plants shrug off drought and other stresses. The firm offers a per-bushel premium to farmers willing to adopt the new technology.

Large agriculture firms are also investing in technologies outside their traditional realms of seeds and chemicals. Bayer, for example, recently formed a company with the synthetic biology firm Ginkgo Bioworks to sell microbes that help plant roots fix nitrogen.

Automation may soon begin disrupting markets for traditional crop inputs like herbicides. FarmWise, a new start-up touting internet-connected robots, raised $5.7 million last year to commercialize weed-destroying robots that use computer vision technology to analyze each plant.